Newspaper crisis spurs debate on free online news

NEW YORK (Reuters) - Anyone following the debate about whether newspapers should make people pay for the news they read online could be forgiven for thinking they woke up in 1999.

The argument, which most newspapers discarded a decade ago or more, is now gaining new currency because the financial condition of publishers in the United States and, increasingly, other parts of the world, is weak and getting weaker.

A new report to be released on Monday by the Project for Excellence in Journalism says the “free versus paid” debate may focus on the wrong remedies while other ideas go unexplored.

It suggests exploring a cable television model, in which a fee to newspapers and other news outlets is part of the monthly Internet access fees that consumers pay. The 800-page report is the sixth in the PEJ’s annual State of the News Media series.

“The public discussion is focused on micropayments. We think other models might be much more promising,” said Tom Rosenstiel, the Washington, D.C.-based group’s director.

That could prove to be more logical and less distracting for people forking over tiny payments to gain access to individual news stories. “You pay when you enter the toll road, not stop every 50 feet when you’re on the toll road and pay a fee,” Rosenstiel said in an interview.

The stakes are enormous for the U.S. newspaper industry, which saw ad revenue fall about 15 percent in 2008. Classified ad sales at many papers is off by half, while some publishers face crippling debt payments.

Meanwhile, money-losing papers like Hearst Corp’s Seattle-Post Intelligencer and San Francisco Chronicle, may shut down. EW Scripps in February closed the Rocky Mountain News, raising fears that more closings are coming.

Experts say the future looks grim if publishers of the country’s more than 1,400 daily papers do not find a way to make money from the news they provide online.

Publishers also have to find a way to “seriously challenge” companies like Google and Yahoo to share more of the ad revenue they make from news stories, according to the PEJ report.


Many newspapers discarded the idea of charging for online news in the 1990s, preferring instead to make their content free to boost readership and court advertisers who were pouring increasing amounts of money into the Internet.

Now, people are used to reading news online for free, and suddenly charging for it again could drive readers away and deprive publishers of website ad sales that now account for about 10 percent of total revenue.

The New York Times prompted a new round of debate on whether it should charge online readers when Executive Editor Bill Keller raised the possibility in an online chat with readers earlier this year. Chairman and Publisher Arthur Sulzberger Jr also hinted at the possibility at a speech last week at Stony Brook University in New York.

“Today, in the face of the economic downturn, we have renewed our analysis of how paid content can augment our core advertising business,” Sulzberger said.

Former Time magazine Managing Editor Walter Isaacon, in a widely read Time article in February, suggested it may be worthwhile to charge small amounts of money for news.

The model has worked for a small number of newspapers, most notably News Corp’s Wall Street Journal, but it is unlikely that others could step in after years of free content and make it a success.

But for a paid subscription to be successful, experts say, it would need cooperation from many publishers, something that has been difficult in the past. Such a partnership, called the New Century Network, was formed in the late 1990s but fell apart after the parties could agree on almost nothing.

The industry also might have to seek approval from Congress or the Justice Department to avoid price-fixing accusations.


EW Scripps Chief Executive Rich Boehne said newspapers must find ways to get economic value out of the news that they provide, beyond advertising sales.

“There’s a lot of revenue available,” Boehne said. “You just have to adjust the business model. Are you going to go out of business just because you can’t find a way to accommodate the cost side?”

There are other options that newspaper publishers should consider, the PEJ report said.

Among them is aping the model. Rather than bludgeoning readers with intrusive ads that few people read or click on, newspapers could build online malls on their sites and provide local search networks for small businesses.

Another would be to offer niche reports for professionals. “They are deep, detailed, up-to-the-minute online resources aimed at professional interests, and they are a proven and highly profitable growth area in journalism,” the PEJ said.

“Several new revenue streams most likely are needed,” the report said. “The closest thing to a consensus right now is that no one source is a likely magic bullet.”

Editing by Tiffany Wu and Maureen Bavdek